The CDFI Coalition sent a letter to the CDFI Fund regarding the certification/recertification process on March 21, 2013. The Coalition requested that the CDFI Fund take steps to ensure that no CDFI was de-certified without notice of potential deficiencies in their recertification applications and an opportunity to cure deficiencies. As stated in our letter, which can be found here, there could be serious and potentially irreparable harm in de-certifying a group, such as putting the group in default of Financial Assistance, Technical Assistance or New Markets award agreements, or in default of other agreements that require the entity to be a certified CDFI.

In response to the Coalition’s concerns, the Fund published a Frequently Asked Questions document yesterday. The key element of that document is the Fund’s commitment to contact any applicant for recertification at least once during the review process if there are documents or materials that are deemed necessary to complete the review. The Fund has set a 90- day timeframe for the 2013 recertification process – during such time a CDFI could cure whatever the deficiency might be. However, the Fund has indicated that, in its discretion, it may not allow a cure period for certain deficiencies, such as inability to demonstrate legal status at time of application; inability to demonstrate primary mission of community development, and/or evidence of government affiliation or control.

The recertification timeframe could have a negative effect on individual CDFIs with pending Financial or Technical Assistance applications in the FY 2013 funding round. The Fund cannot make awards to groups that do not meet the certification requirements at the time of the award. Accordingly, any deficiencies identified by the Fund must be handled in sufficient time for the Fund to complete the certification process before the Financial and Technical Assistance awards are completed. If the issues cannot be resolved by that time, the organization will not be eligible to receive a financial award.

Many CDFIs participating in the New Markets Tax Credit (NMTC) program, took advantage of a provision in the NMTC statute that permits CDFIs to create CDEs automatically. Loss of CDFI certification could mean that the CDE’s certification is also at risk. Loss of certification as a CDE is an event of recapture of the tax credits under the NMTC statute, an extremely serious matter. The Fund has indicated in the FAQ that there will be an opportunity, if it is not possible to recertify the CDFI, to submit an application to separately certify the CDE. Please review the Frequently Asked Questions document for details.

CDVCA Member Discount:

CDVCA members can register directly on the site and enter the discount code “CDVCA”  www.ventureforwardconference.com.

SJF Ventures invests in high growth, positive impact companies seeking expansion capital rounds of $1MM to $10MM. SJF has invested in 36 portfolio companies over the last decade. “We realize SJF’s success is due to the exceptional results achieved by our portfolio companies such as Aseptia, BioSurplus, CleanScapes, Community Energy, eRecyclingCorps, Fieldview, Optoro, MediaMath, MedPage Today, and ServiceChannel,” said David Griest, SJF Managing Director. “We are eager to find the next set of great entrepreneurs for our third fund.”

SJF Third Fund Press Release

Paul Beck, a professor emeritus of political science at Ohio State University, says that meant less money for schools and local government.

“They were pretty massive cuts,” Beck says. “Local governments and school districts were basically having to tighten their belts considerably. There was a substantial downturn in government jobs in Ohio, particularly at the local level.”

Now that Ohio has a budget surplus, the discussions between Kasich and lawmakers aren’t about restoring spending to schools and local governments. Most of the money is earmarked for tax cuts.

Florida — like many states — is putting much of the surplus into education. After cutting education spending by more than a billion dollars in his first year, Gov. Scott is proposing a $2,500 across-the-board raise for teachers. Scott, by the way, is running for re-election next year.

To read or hear the full article: http://www.npr.org/2013/04/29/179762891/after-belt-tightening-some-states-are-back-in-the-black?ft=3&f=127088100&sc=nl&cc=ph-20130501

The letter was submitted to the Appropriations Committee today with the following Senators signed on: Menendez (D-NJ); Gillibrand (D-NY); Schumer (D-NY); King (I-ME); Sanders (I-VT); Hagan (D-NC); Johnson (D-SD); Stabenow (D-MI); Wyden (D-OR); Tester (D-MT); Baucus (D-MT); Landrieu (D-LA); Franken (D-MN); Klobuchar (D-MN); Durbin (D-IL); Schatz (D-HI); Reed (D-RI); Boxer (D-CA); Merkley (D-OR).

Read the full letter here: http://www.cdfi.org/wp-content/uploads/2012/06/FY14-CDFI-Fund-letter-Menendez-plus-18.pdf

For full content: http://www.frbsf.org/publications/community/review/vol9_issue1/index.html

They use data from the Federal Reserve’s triennial Survey of Consumer Finances (SCF) and find that these households held a large amount of real estate relative to their incomes and total assets, mostly in the form of
a primary residence, and had relatively little owners’ equity in their homes. Declining house prices had a relatively large impact on the net worth of these households, many of which simultaneously experienced job and income losses during the recession.

Similarly, using data fromthe SCF,Grinstein‐Weiss and Key find thatlow‐wealth homeowners
owned relatively few non‐housing assets and were thus deeply exposed to the broad downturn in housing prices
during the recession.

In absolute terms, wealthier homeowners lost more home equity during the housing crisis,
but homeowners with lower initial net worth lost more as a proportion of their total wealth.

These trends at the household level have important macroeconomic implications.

Mian, Rao and Sufi find that poorer and more indebted households reduced their spending much more than their wealthier counterparts in response to declines in housing net worth during the Great Recession.

Similarly, Dynan and Edelberg find thatafter the recession, households that were more indebted were more likely to report cutting back consumption, even after controlling for wealth, income, and other factors that would be expected to influence consumption.

Case, Quigley and Shiller find that changes in housing values exert a larger and more important impact upon
household consumption than do changes in stock market values. These studies suggest that the status of
household balance sheets, particularly the level and composition of household debt, have an influential impact on
aggregate consumption, which has been a factor in the slow economic recovery.

Read the full brief here: http://www.frbsf.org/publications/community/research-briefs/household-net-worth-asset-ownership-among-the-economically-vulnerable.pdf

The new £14 million fund will be managed by Bridges with Big Society Capital acting as cornerstone investor alongside the Bridges Social Entrepreneurs Fund, Omidyar Network and Panahpur.

Charities and social enterprises play a crucial role in addressing tough societal challenges and providing life-changing support to the most vulnerable.  However, philanthropic capital is not enough to scale up the work of these organisations driving a growing need for new and sustainable funding sources for social sector organisations.

The Bridges Social Impact Bond Fund aims to be a sustainable source of funding and support for social sector organisations delivering social outcomes-based programmes. The new vehicle is part of the £56 million investment commitments announced by Big Society Capital since its launch in April last year.

Read the full press release here: http://www.bridgesventures.com/news/launch-bridges-social-impact-bond-fund

At the SBA, Mr. Greene was responsible for both the Small Business Investment Company (SBIC) program, a growth capital program with approximately $18 billion of assets under management, as well as the Small Business Investment Research (SBIR) program, one of the government’s largest innovation programs, which provides over $2 billion of R&D funding to small businesses each year. He also led SBA’s efforts focused on stimulating high-growth entrepreneurship and was one of the key leaders in the Administration’s Startup America initiative.

“Whether creating and supporting initiatives like the Startup America Partnership, or incorporating the spirit of innovation and risk-taking into our work, entrepreneurship is at the heart of everything we do at the Case Foundation,” said Jean Case, CEO of the Case Foundation and an active investor and entrepreneur. “Sean Greene has a thorough understanding of the innovations that happen at the intersections of profit and purpose, and we’re thrilled to have him lend his experience to our work.”

In his role, Mr. Greene will help the Case Foundation evaluate and refine its efforts to revitalize communities by supporting entrepreneurship. Leveraging his experience in launching a $1B impact investing initiative at the SBA, he will join Senior Fellow Sonal Shah playing a key role in the Foundation’s effort to identify new approaches to inspire, educate, and mobilize capital in the impact investing space. Mr. Greene is also advising Revolution LLC, the venture capital firm co-founded by Steve Case, chairman of the Case Foundation.

“Entrepreneurship isn’t just the key to keeping America’s economy running, rather it is the success of entrepreneurs and entrepreneurial values that keep our communities running,” said Mr. Greene. “I am honored to join the Case Foundation, an organization that has long understood the value of applying an entrepreneurial lens to driving social change.”

Prior to joining the SBA, Mr. Greene was the founder and CEO of Away.com, an online travel company that he sold to Orbitz. He was also a co-founder of Rock Creek Ventures and LaunchBox Digital, a seed-stage investment firm in Washington, D.C., and also served as a management consultant with McKinsey and Co. Greene holds an AB from Princeton University, an MBA from Yale’s School of Management, and was a Fulbright Scholar at the National University of Singapore.

http://casefoundation.org/pressroom/releases/sba-innovation-chief-sean-greene-joins-case-foundation-entrepreneur-residence

CDVCA worked closely with the bank regulatory agencies—with special thanks to the OCC!— to convince congress to insert language into the final Dodd-Frank legislation exempting so-called “Public Welfare” or “Part 24” investments from the general prohibition contained in the legislation against bank investments in private equity funds, including venture capital funds.  Investments in CDVC funds would be considered Public Welfare investments.

The following is the relevant section of Dodd-Frank, which adds a 13^th section to the Bank Holding Company Act.  The most relevant language is marked in bold:

SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended by adding at the end the following:

‘‘SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.

‘‘(a) IN GENERAL.—

‘‘(1) PROHIBITION.—Unless otherwise provided in this section, a banking entity shall not—

‘‘(A) engage in proprietary trading; or

‘‘(B) acquire or retain any equity, partnership, or other ownership interest in or sponsor a hedge fund

or a private equity fund…

‘‘(d) PERMITTED ACTIVITIES.—

‘‘(1) IN GENERAL.—Notwithstanding the restrictions under subsection (a), to the extent permitted by any other provision of Federal or State law, and subject to the limitations under paragraph (2) and any restrictions or limitations that the appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, may determine, the following activities (in this section referred to as ‘permitted activities’) are permitted:…

‘‘(E) Investments in one or more small business investment companies, as defined in section 102 of the Small Business Investment Act of 1958 (15 U.S.C. 662), investments designed primarily to promote the public welfare, of the type permitted under paragraph (11) of section 5136 of the Revised Statutes of the United States (12 U.S.C. 24), or investments that are qualified rehabilitation expenditures with respect to a qualified rehabilitated building or certified historic structure, as such terms are defined in section 47 of the Internal Revenue Code of 1986 or a similar State historic tax credit program.

In turn, paragraph (11) of Section 5136 of the Revised Statutes of the United States (12 U.S.C. 24)  reads as follows:

Eleventh. To make investments directly or indirectly, each of which is designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as by providing housing, services, or jobs).

These are basically investments, such as investments in CDVC funds, for which banks would receive credit under the Community Reinvestment Act.